The Financial Express

Bangladesh Bank curtails banks’ power to waive interest on loans

| Updated: November 19, 2022 22:06:43

Bangladesh Bank curtails banks’ power to waive interest on loans

Bangladesh Bank is seeking to curtail the powers of the board of directors of banks to waive interest on loans without consultations with the relevant departments.

The central bank’s Banking Regulations and Policy Department on Wednesday issued a circular in this regard, according to UNB.

It instructed the banks in case of interest waiver they have to take the opinion of the head of internal control and compliance (HICC) through the internal audit department.

The circular stated that in essential cases, the opinion of the HICC should be taken through the internal audit department of the bank to confirm the rationale for the relaxation of the conditions for the collection of funds.

It said that banks can waive interest on loans due to various uncontrollable reasons such as the death of the borrower, natural calamities, epidemics, flood, due to distress, or closed projects bank loan interest may be waived in whole or in part.

But recently, it has been seen that the banks often waive the interest of various customers without considering these special circumstances.

 “This may create disinclination among the customers to pay the bank dues within the stipulated time to get the interest waiver facility, which is against the overall credit discipline in the banking sector,” it said.

For this purpose, to create awareness among the customers to pay the bank's dues within the prescribed period, maintain overall credit discipline and protect the customers' interests, the new guidelines should be followed in the waiver of all types of interest.

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